QUICK INFO: Relative Strength Index is one of the basic indicators widely used in forex, stocks and binary options trading. RSI is an oscillator that helps predict overbought and oversold market levels.
RSI is one of the basic indicators that can be combined with many other indicators. Relative strength index can serve as the main indicator or the confirmation indicator with different trading strategies and systems. Relative Strength Index or RSI is an indicator that defines the strength or weakness of a traded asset based on the closing prices in a selected time period. RSI is an oscillator, which means it moves between the levels of 0 and 100. Levels below 30 are considered as oversold conditions and imply that the price should go UP and above 70 are considered as overbought conditions and imply that the price should go DOWN. When trading binary options the RSI Indicator can help the trader to find profitable entry positions for market reversals in the overbought or oversold markets and also to avoid bad trades in direction of continuation of the trends.
In the periods of longer trends the RSI Indicator can stay above the level 70 or below the level 30 for longer time. To be able to predict the occurrences of longer trends a useful indicator to use is the Directional Movement Index. For defining overbought and oversold conditions also Stochastic Oscillator - another indicator similar to RSI - can be utilized.
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